18284 Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices 

collections, the Railroad Retirement 

Board (RRB) will publish periodic 

summaries of proposed data collections. 

Comments are invited on: (a) Whether 

the proposed information collection is 

necessary for the proper performance of 

the functions of the agency, including 

whether the information has practical 

utility; (b) the accuracy of the RRB’s 

estimate of the burden of the collection 

of the information; (c) ways to enhance 

the quality, utility, and clarity of the 

information to be collected; and (d) 

ways to minimize the burden related to 

the collection of information on 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

Title and purpose of information 

collection: Placement Service; OMB 

3220–0057 Section 12(i) of the Railroad 

Unemployment Insurance Act (RUIA), 

authorizes the Railroad Retirement 

Board (RRB) to establish maintain, and 

operate free employment offices to 

provide claimants for unemployment 

benefits with job placement 

opportunities. Section 704(d) of the 

Regional Railroad Reorganization Act of 

1973, as amended, and as extended by 

the consolidated Omnibus Budget 

Reconciliation Act of 1985, required the 

RRB to maintain and distribute a list of 

railroad job vacancies, by class and 

craft, based on information furnished by 

rail carriers to the RRB. Although the 

requirement under the law expired 

effective August 13, 1987, the RRB has 

continued to obtain this information in 

keeping with its employment service 

responsibilities under Section 12(k) of 

the RUIA. Application procedures for 

the job placement program are 

prescribed in 20 CFR 325. The 

procedures pertaining to the RRB’s 

obtaining and distributing job vacancy 

reports furnished by rail carriers are 

described in 20 CFR 346.1. 

The RRB currently utilizes four forms 

to obtain information needed to carry 

out its job placement responsibilities. 

Form ES–2, Supplemental Information 

for Central Register, is used by the RRB 

to obtain information needed to update 

a computerized central register of 

separated and furloughed railroad 

employees available for employment in 

the railroad industry. Form ES–21, 

Referral to State Employment Service, 

and ES–21c, Report of State 

Employment Service Office, are used by 

the RRB to provide placement assistance 

for unemployed railroad employees 

through arrangements with State 

Employment Service offices. Form UI–

35, Field Office Record of Claimant 

Interview, is used primarily by RRB 

field office staff to conduct in-person 

interviews of claimants for 

unemployment benefits. Completion of 

these forms is required to obtain or 

maintain a benefit. In addition, the RRB 

also collects Railroad Job Vacancies 

information received voluntarily from 

railroad employers. 

The RRB proposes minor, non-burden 

impacting editorial changes to Form ES–

2, minor non-burden impacting editorial 

and reformatting changes to Form ES–

21, and a minor non-burden impacting 

change to Form UI–35. No changes are 

being proposed to Form ES–21c or to 

the Railroad Job Vacancies Report. 

The estimated annual respondent 

burden for this collection is as follows: 

ESTIMATE OF ANNUAL RESPONDENT BURDEN

Form Nos. Annual responses Completion time 

(min) 

Burden 

(hrs) 

ES–2 .......................................................................................................................... 7,500 0.25 31 

ES–21 ........................................................................................................................ 3,500 0.68 40 

ES–21c ...................................................................................................................... 1,250 1.50 31 

UI–35 (in person) ....................................................................................................... 9,000 7.00 1,050 

UI–35 (by mail) .......................................................................................................... 1,000 10.50 175 

Railroad Job Vacancies Report ................................................................................. 750 10.00 125 

Total .................................................................................................................... 23,000 .............................. 1,452 

Additional Information or Comments: 

To request more information or to 

obtain a copy of the information 

collection justification, forms, and/or 

supporting material, please call the RRB 

Clearance Officer at (312) 751–3363 or 

send an e-mail request to 

Charles.Mierzwa@RRB.GOV. Comments 

regarding the information collection 

should be addressed to Ronald J. 

Hodapp, Railroad Retirement Board, 844 

North Rush Street, Chicago, Illinois 

60611–2092 or send an e-mail to 

Ronald.Hodapp@RRB.GOV. Written 

comments should be received within 60 

days of this notice. 

Charles Mierzwa, 

Clearance Officer. 

[FR Doc. E7–6785 Filed 4–10–07; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–27779; File No. 812–13342] 

Jefferson National Life Insurance 

Company, et al. 

April 6, 2007 

AGENCY: Securities and Exchange 

Commission (the ‘‘Commission’’). 

ACTION: Notice of application for an 

order of approval pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘Act’’) approving 

certain substitutions of securities and an 

order of exemption pursuant to Section 

17(b) of the Act from Section 17(a) of 

the Act. 

APPLICANTS: Jefferson National Life 

Insurance Company (‘‘JNL’’), Jefferson 

National Life Annuity Account C 

(‘‘Separate Account C’’), Jefferson 

National Life Annuity Account E 

(‘‘Separate Account E’’), Jefferson 

National Life Annuity Account F 

(‘‘Separate Account F’’), Jefferson 

National Life Annuity Account G 

(‘‘Separate Account G’’), Jefferson 

National Life Annuity Account H 

(‘‘Separate Account H’’), Jefferson 

National Life Annuity Account I 

(‘‘Separate Account I’’), Jefferson 

National Life Annuity Account J 

(‘‘Separate Account J’’), Jefferson 

National Life Annuity Account K 

(‘‘Separate Account K’’), Conseco 

Variable Insurance—Separate Account L 

(‘‘Separate Account L’’, and together 

with Separate Account C, Separate 

Account E, Separate Account F, 

Separate Account G, Separate Account 

H, Separate Account I, Separate 

Account J, and Separate Account K, the 

‘‘Separate Accounts’’ and, collectively 

with JNL, the ‘‘Applicants’’), Northern 

Lights Variable Trust (‘‘NLVT’’ and 

collectively with Applicants, the 

‘‘Section 17 Applicants’’). 


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Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices 18285 

SUMMARY OF APPLICATION: Applicants 

seek an order approving the proposed 

substitution of shares of the 40|86 Series 

Trust Equity Portfolio and 40|86 Series 

Trust Balanced Portfolio (the ‘‘Replaced 

Funds’’) with shares of the JNF Equity 

Portfolio and JNF Balanced Portfolio 

(the ‘‘Replacement Funds’’), (the 

‘‘Substitutions’’). Section 17 Applicants 

seek an order exempting them from the 

provisions of Section 17(a) of the Act to 

the extent necessary to permit JNL to 

carry out each of the Substitutions 

(‘‘Application’’). 

FILING DATE: The application was 

originally filed on November 9, 2006, 

and was amended and restated on 

January 17, 2007, and April 2, 2007. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the Secretary of 

the Commission and serving Applicants 

with a copy of the request, personally or 

by mail. Hearing requests must be 

received by the Commission by 5:30 

p.m. on April 27, 2007, and should be 

accompanied by proof of service on 

Applicants in the form of an affidavit or, 

for lawyers, a certificate of service. 

Hearing requests should state the nature 

of the requester’s interest, the reason for 

the request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Secretary of the 

Commission. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants, 9920 Corporate Campus 

Drive, Suite 1000, Louisville, Kentucky 

40223. 

FOR FURTHER INFORMATION CONTACT: 

Patrick Scott, Senior Counsel, Office of 

Insurance Products, Division of 

Investment Management, at (202) 551–

6763, or Harry Eisenstein, Branch Chief, 

at (202) 661–6795. 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application is 

available for a fee from the Public 

Reference Branch of the Commission, 

100 F Street, NE., Washington, D.C. 

20549 (202–942–8090). 

Applicants’ and Section 17 Applicants’

Representations 

1. JNL is a stock life insurance 

company originally organized in 1937 

under the laws of Texas. JNL was 

formerly a subsidiary of Conseco 

Variable Insurance Company. JNL is 

currently an affiliate of Inviva, Inc., 

which purchased JNL in 2002. 

2. Separate Account C was established 

in 1980. Separate Account C is 

registered under the Act as a unit 

investment trust (File No. 811–04819) 

and is used to fund variable annuity 

contracts issued by JNL. Two variable 

annuity contracts funded by Separate 

Account C are affected by the 

Substitutions. 

Separate Account E was established 

in 1993. Separate Account E is 

registered under the Act as a unit 

investment trust (File No. 811–08288) 

and is used to fund variable annuity 

contracts issued by JNL. One variable 

annuity contract funded by Separate 

Account E is affected by the 

Substitutions. 

Separate Account F was established 

in 1997. Separate Account F is 

registered under the Act as a unit 

investment trust (File No. 811–08483) 

and is used to fund variable annuity 

contracts issued by JNL. One variable 

annuity contract funded by Separate 

Account F is affected by the 

Substitutions. 

Separate Account G was established 

in 1996. Separate Account G is 

registered under the Act as a unit 

investment trust (File No. 811–07501) 

and is used to fund variable annuity 

contracts issued by JNL. Three variable 

annuity contracts funded by Separate 

Account G are affected by the 

Substitutions. 

Separate Account H was established 

in 1999. Separate Account H is 

registered under the Act as a unit 

investment trust (File No. 811–09693) 

and is used to fund variable annuity 

contracts issued by JNL. One variable 

annuity contract funded by Separate 

Account H is affected by the 

Substitutions. 

Separate Account I was established in 

2000. Separate Account I is registered 

under the Act as a unit investment trust 

(File No. 811–10213) and is used to 

fund variable annuity contracts issued 

by JNL. One variable annuity contract 

funded by Separate Account I is affected 

by the Substitutions. 

Separate Account J was established in 

2003. Separate Account J is registered 

under the Act as a unit investment trust 

(File No. 811–21498) and is used to 

fund variable annuity contracts issued 

by JNL. One variable annuity contract 

funded by Separate Account J is affected 

by the Substitutions. 

Separate Account K was established 

in 2003. Separate Account K is 

registered under the Act as a unit 

investment trust (File No. 811–21500) 

and is used to fund variable annuity 

contracts issued by JNL. One variable 

annuity contract funded by Separate 

Account K is affected by the 

Substitutions. 

Separate Account L was established 

in 2000. Separate Account L is 

registered under the Act as a unit 

investment trust (File No. 811–10271) 

and is used to fund variable universal 

life contracts issued by JNL. One 

variable universal life contract funded 

by Separate Account L is affected by the 

Substitutions (all eleven variable 

annuity contracts and the one variable 

universal life contract affected by the 

Substitutions are collectively referred to 

as the ‘‘Contracts’’). 

3. NLVT was organized in Delaware 

as a statutory trust on November 2, 2005 

and is registered under the Act as an 

open-end management investment 

company. 

4. 40/86 Advisors, Inc. (‘‘Advisors’’) is 

the investment adviser to the Replaced 

Funds, and is a subsidiary of Conseco 

Inc., JNL’s former parent. The two 

Replaced Funds are portfolios of the 40/ 

86 Series Trust, formerly known as the 

Conseco Series Trust (‘‘CST’’). JNF 

Advisors, Inc. (‘‘JNF Advisor’’) is a 

newly formed investment adviser under 

common control with JNL. JNF Advisor 

will serve as investment adviser to the 

Replacement Funds, which will be 

portfolios of NLVT. Chicago Equity 

Partners (‘‘CEP’’) is a registered 

investment adviser and is currently 40/ 

86 Series Trust Equity Portfolio’s subadviser. CEP is also currently the 40/86 

Series Trust Balanced Portfolio’s subadviser for the equity portion of the 

fund. After the Substitutions, CEP will 

be sub-adviser for both Replacement 

Funds, including the fixed income 

portion of the JNF Balanced Portfolio. 

There are no corporate affiliations 

between any of these three investment 

advisers. 

5. Purchase payments under the 

Contracts may be allocated to one or 

more sub-accounts of the Separate 

Accounts (the ‘‘Sub-Accounts’’). 

Income, gains and losses, whether or not 

realized, from assets allocated to the 

Separate Accounts are, as provided in 

the Contracts, credited to or charged 

against the Separate Accounts without 

regard to other income, gains or losses 

of JNL. The assets maintained in the 

Separate Accounts will not be charged 

with any liabilities arising out of any 

other business conducted by JNL. 

Nevertheless, all obligations arising 

under the Contracts, including the 

commitment to make annuity payments 

or death benefit payments, are general 

corporate obligations of JNL. 

Accordingly, all of the assets of JNL are 

available to meet its obligations under 

the Contracts. 


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6. The Contracts permit allocations of 

account value to available Sub-Accounts 

that invest in specific investment 

portfolios of underlying registered 

investment companies (each a ‘‘Fund’’

and, collectively, the ‘‘Mutual Funds’’). 

The Mutual Funds are registered under 

the Act as open-end management 

investment companies. 

7. The Contracts permit transfers of 

accumulation value from one SubAccount to another Sub-Account at any 

time subject to certain restrictions. No 

sales charge applies to such a transfer of 

accumulation value among SubAccounts. 

8. The Contracts reserve the right, 

upon notice to contract owners (the 

‘‘Contract Owners’’), to substitute shares 

of another mutual fund for shares of a 

Fund held by a Sub-Account. 

9. Account C was established in 1980 

as a management investment company. 

Effective May 1, 1993, Account C was 

restructured into a unit investment 

trust, pursuant to Commission 

exemptive relief. As a condition of this 

exemptive relief, certain Contract 

Owners’ contracts were endorsed to 

limit the advisory fees the Contract 

Owner paid on investments in the 40/ 

86 Series Trust Equity Portfolio. 

Investments by those Contract Owners 

in the corresponding Replacement Fund 

will continue to benefit from the 

advisory fee limitations which were a 

condition of the prior exemptive relief. 

10. The Replaced Funds involved in 

the Substitutions include 2 separate 

4086 Series Trust portfolios. After the 

Substitutions, the investment objective 

and policies of each Replacement Fund 

will be the same as or substantially 

similar to the investment objective and 

policies of the corresponding Replaced 

Fund. The Substitutions are being 

proposed for several reasons. First, the 

accumulated assets in the Replaced 

Funds were derived from an earlier 

time, prior to 2002, when Conseco Inc., 

JNL’s former parent, formed a large 

commissioned broker-dealer network 

that was familiar with, and loyal to, the 

CST funds. That broker-dealer network 

dissolved after Conseco experienced 

financial difficulties in the summer of 

2002. Today JNL, as an affiliate of 

Inviva, Inc. (which purchased JNL 

(f/k/a Conseco Variable Insurance 

Company)), has almost no access to the 

broker-dealer network that was 

responsible for the growth in assets in 

the CST funds. In addition, JNL has 

developed its own, very different target 

audience: the fee-based and fee-only 

adviser, as opposed to the traditional 

commission-based representative. 

Second, as part of the discussions 

related to the Substitutions of the 

Replaced Funds, Advisors has indicated 

to JNL that sponsoring an insurancededicated mutual fund complex did not 

have a place in its parent corporation’s 

long-term business plan. Advisors 

intends to continue to serve in its 

current capacity with respect to the 

Replaced Funds to facilitate a smooth 

transition. The Board of Trustees of 40/ 

86 Series Trust voted to liquidate, on or 

about March 23, 2007, the Trust’s three 

other portfolios, the Fixed Income, 

Government Securities and Money 

Market Portfolios, and these portfolios 

have been liquidated. 

Currently all of the Mutual Funds are 

unaffiliated investment companies and 

changes due to investment performance, 

style drift, or management practice 

issues require substantial systems, 

filing, and printing resources, which 

slows the process to make changes, if 

necessary. Because it is anticipated the 

Replacement Funds and JNF Advisors 

will have ‘‘manager of managers’’

exemptive relief, JNF Advisor, as 

investment adviser, will be able to act 

more quickly and efficiently to protect 

Contract Owners’ interests if the 

investment strategy, management team 

or performance of a sub-adviser does not 

meet expectations. JNF Advisor plans to 

file an application for ‘‘manager of 

managers’’ exemptive relief within 6 

months from the date that the 

Substitutions are effected. The 

‘‘manager of managers’’ exemptive relief 

would permit JNF Advisor, as the 

investment adviser for the existing 

series, to replace any sub-adviser or to 

employ a new sub-adviser without 

submitting such actions for the approval 

of shareholders of the affected series. 

Before a Replacement Fund relies on 

any Commission order or rule that 

would permit the Replacement Fund to 

enter into contracts with subadvisers 

without obtaining shareholder approval, 

the Replacement Fund’s reliance on the 

order or rule will be approved, 

following the Substitutions, by a 

majority of the Replacement Fund’s 

outstanding voting securities. 

11. JNF Advisor will serve as the 

investment adviser for each 

Replacement Fund. However, the 

management of each Replacement Fund 

will be sub-advised as described below. 

Additional information, including the 

investment objective, fee structure and 

expenses for the fiscal year ending in 

2006 for each of the Replaced and each 

Replacement Fund, is shown in the 

tables that follow: 

12. Substitution 1 

Replaced fund Replacement fund 

Fund Name .......................... 40/86 Series Trust Equity Portfolio ................................. JNF Equity; subadvised by CEP 

Investment Objective ........... Seeks to provide a high total return consistent with 

preservation of capital and a prudent level of risk. 

Normally invests at least 80% of its assets in U.S. 

common stocks. May also invest in other U.S. and 

foreign securities, including convertible securities and 

warrants. Is normally widely diversified by industry 

and company, with a focus on small and mediumsize companies. Uses a proprietary multi-factor 

model to select securities. The model includes momentum, value and quality factors. The process focuses on security selection while remaining industry, 

sector, style and capitalization neutral.

Seeks to provide a high total return consistent with 

preservation of capital and a prudent level of risk. 

Normally invests at least 80% of its assets in U.S. 

common stocks. May also invest in other U.S. and 

foreign securities, including convertible securities and 

warrants. Is normally widely diversified by industry 

and company, with a focus on small and mediumsize companies. Uses a proprietary multi-factor 

model to select securities. The model includes momentum, value and quality factors. The process focuses on security selection while remaining industry, 

sector, style and capitalization neutral. 

Principal Risks ..................... • Market Risk .................................................................. • Market Risk. 

• Small-Company Risk ................................................... • Small-Company Risk. 

• Price Volatility .............................................................. • Price Volatility. 

Adviser/Subadviser .............. 40/86 Advisors Partners/CEP ......................................... JNF Advisor/CEP. 

Fund Asset Level as of 9/30/ 

06.

$169,387,929 .................................................................. $0 

Mgmt. Fee ............................ 0.79%* ............................................................................. 0.79%*

12b–1 Fee ............................ 0.25% .............................................................................. 0.25% 

Other Expenses ................... 0.12% .............................................................................. 0.20% 


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Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices 18287 

Replaced fund Replacement fund 

Total Annual Operating 

Expns..

1.16% .............................................................................. 1.24% 

Fee Reduction .............. ¥0.06% ........................................................................... ¥0.14% 

Net Total Annual Expenses.1.10% .............................................................................. 1.10% 

*The advisory fee schedule does not contain breakpoints. 

The Applicants believe that the 

Replacement Fund is an appropriate 

substitute for the Replaced Fund 

because the investment objective and 

policies of the Replacement Fund are 

nearly identical to those of the Replaced 

Fund. Additionally, the Replacement 

Fund will be managed by the same subadviser as the Replaced Fund, and will 

continue using the same style and 

strategy as is used in managing the 

Replaced Fund. 

13. Substitution 2 

Replaced fund Replacement fund 

Fund Name .......................... 40/86 Series Trust Balanced Portfolio ............................ JNF Balanced; subadvised by CEP. 

Investment Objective ........... Seeks a high total investment return consistent with the 

preservation of capital and prudent investment risk. 

Normally, invests approximately 50–65% of assets in 

equities, and the remainder in a combination of fixed 

income securities, or cash equivalents. The equity 

portion of the Portfolio is invested primarily in U.S. 

common stocks but may also invest in other U.S. and 

foreign securities, including convertible securities and 

warrants. Normally, the equity portion will be widely 

diversified by industry and company. It will focus on 

large and medium-size companies.

Seeks a high total investment return consistent with the 

preservation of capital and prudent investment risk. 

Normally, invests approximately 50–65% of assets in 

equities, and the remainder in a combination of fixed 

income securities, or cash equivalents. The equity 

portion of the Portfolio is invested primarily in U.S. 

common stocks but may also invest in other U.S. and 

foreign securities, including convertible securities and 

warrants. Normally, the equity portion will be widely 

diversified by industry and company. It will focus on 

large and medium-size companies. 

The fixed income portion of the Portfolio will normally 

maintain at least 25% of the value of the Portfolio’s 

assets in a wide range of domestic and foreign fixedincome securities, including non-U.S. dollar denominated securities. The majority of foreign investments 

will be in Yankee Bonds. These fixed-income securities will have primarily intermediate and/or long-term 

maturities. The Portfolio may also invest in below investment grade fixed-income securities that are not 

believed to involve undue risk to income or principal. 

The lowest rating categories in which the Portfolio 

will invest are rated Caa/CCC by Moody’s/S&P.

The fixed income portion of the portfolio will normally 

maintain at least 25% of the value of the Portfolio’s 

assets in a wide range of domestic and foreign fixedincome securities, including non-U.S. dollar denominated securities. The majority of foreign investments 

will be in Yankee Bonds. These fixed-income securities will have primarily intermediate and/or long-term 

maturities. The Portfolio may also invest in below investment grade fixed-income securities that are not 

believed to involve undue risk to income or principal. 

The lowest rating categories in which the Portfolio 

will invest are rated Caa/CCC by Moody’s/S&P. 

Principal Risks ..................... • Market Risk .................................................................. • Market Risk. 

• Midsize Company Risk ................................................ • Midsize Company Risk. 

• Price Volatility .............................................................. • Price Volatility. 

• Principal Loss .............................................................. • Principal Loss. 

• Credit Risk ................................................................... • Credit Risk. 

• Interest Rate Risk ........................................................ • Interest Rate Risk. 

• Foreign Risk ................................................................ • Foreign Risk. 

• Leverage Risk .............................................................. • Leverage Risk. 

Adviser/Subadviser .............. 40/86/CEP—Equity ......................................................... JNF Advisor/CEP. 

40/86 Advisors—Fixed Income 

Fund Asset Level as of 9/30/ 

06.

$42,161,064 .................................................................... $0 

Mgmt. Fee ............................ 0.79%* ............................................................................. 0.79%* 

12b–1 Fee ............................ 0.25% .............................................................................. 0.25% 

Other Expenses ................... 0.16% .............................................................................. 0.23% 

Total Annual Operating 

Expenses.

1.20% .............................................................................. 1.27% 

Fee Reduction .............. ¥0.10% ........................................................................... ¥0.17% 

Net Total Annual Expenses.1.10% .............................................................................. 1.10% 

*The advisory fee schedule does not contain breakpoints. 

The Applicants believe that the 

Replacement Fund is an appropriate 

substitute for the Replaced Fund 

because the investment objective and 

policies of the Replacement Fund are 

substantially similar to those of the 

Replaced Fund. Additionally, the 

Replacement Fund will be managed by 

the same sub-adviser as the Replaced 


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18288 Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices 

Fund, and will continue using the same 

style and strategy as is used in managing 

the Replaced Fund. 

14. The Substitutions will take place 

at the Funds’ relative net asset values 

determined on the date of the 

Substitutions in accordance with 

Section 22 of the Act and Rule 22c–1 

thereunder with no change in the 

amount of any Contract Owner’s 

account value or death benefit or in the 

dollar value of his or her investment in 

any of the Sub-Accounts. Accordingly, 

there will be no financial impact on any 

Contract Owner. The Substitutions will 

generally be effected by having each of 

the Sub-Accounts that invests in the 

Replaced Funds redeem its shares at the 

net asset value calculated on the date of 

the Substitutions and purchase shares of 

the respective Replacement Funds at the 

net asset value calculated on the same 

date. 

15. In the alternative, should a 

Replaced Fund determine that a cash 

redemption would adversely affect its 

shareholders, it may redeem the interest 

‘‘in-kind.’’ In that case, the Substitutions 

will be effected by the Sub-Account 

contributing all the securities it receives 

from the Replaced Fund for an amount 

of Replacement Fund shares equal to the 

fair market value of the securities 

contributed. All in-kind redemptions 

from a Replaced Fund of which any of 

the Applicants is an affiliated person 

will be effected in accordance with the 

conditions set forth in the Commission’s 

no-action letter issued to Signature 

Financial Group, Inc. (available 

December 28, 1999). 

16. The Substitutions will be 

described in a supplement to the 

prospectuses for the Contracts 

(‘‘Supplements’’) filed with the 

Commission and mailed to Contract 

Owners. The Supplements will provide 

Contract Owners with notice of the 

Substitutions and describe the reasons 

for engaging in the Substitutions. The 

Supplements also will inform Contract 

Owners with assets allocated to a SubAccount investing in the Replaced 

Funds that the Replaced Funds will not 

be an available investment option after 

the date of the Substitutions and that 

Contract Owners will have the 

opportunity to reallocate account value 

once: 

• Prior to the Substitutions, from the 

Sub-Accounts investing in the Replaced 

Funds, and 

• For 30 days after the Substitutions, 

from the Sub-Accounts investing in the 

Replacement Funds to Sub-Accounts 

investing in other Funds available under 

the respective Contracts, without 

diminishing the number of free transfers 

that may be made in a given contract 

year and without the imposition of any 

transfer charge or limitation, other than 

any applicable limitations in place to 

deter potentially harmful excessive 

trading. To the extent a Contract Owner 

has account value allocated to both SubAccounts investing in a Replaced Fund, 

the Contract Owner will be permitted 

one reallocation from each SubAccount. If a Contract Owner reallocates 

from both Sub-Accounts on the same 

day, they will have exhausted the 

number of permitted reallocations. 

17. The prospectuses for the Contracts 

will contain the substance of the 

information contained in the 

Supplements concerning the 

Substitutions. Each Contract Owner will 

be provided with a prospectus for the 

Replacement Funds before the 

Substitutions, except that with respect 

to Replacement Funds that become 

effective contemporaneously with the 

Substitutions, a prospectus will be sent 

to affected Contract Owners with the 

written confirmation. Within five days 

after the Substitutions, JNL will send 

affected Contract Owners written 

confirmation that the Substitutions have 

occurred and notice that Contract 

Owners will have the opportunity to 

reallocate account value, for 30 days 

after the Substitutions, from the SubAccounts investing in the Replacement 

Funds to Sub-Accounts investing in 

other Funds available under the 

respective Contracts, without 

diminishing the number of free transfers 

that may be made in a given contract 

year and without the imposition of any 

transfer charge or limitation, other than 

any applicable limitations in place to 

deter potentially harmful excessive 

trading. 

18. JNL will pay all direct and 

indirect expenses and transaction costs 

of the Substitutions, including all legal, 

accounting and brokerage expenses 

relating to the Substitutions. No costs 

will be borne by Contract Owners. 

Affected Contract Owners will not incur 

any fees or charges as a result of the 

Substitutions, nor will their rights or the 

obligations of the Applicants under the 

Contracts be altered in any way. The 

Substitutions will not cause the fees and 

charges under the Contracts currently 

being paid by Contract Owners to be 

greater after the Substitutions than 

before the Substitutions. The 

Substitutions will have no adverse tax 

consequences to Contract Owners and 

will in no way alter the tax benefits to 

Contract Owners. 

19. Applicants believe that their 

request satisfies the standards for relief 

pursuant to Section 26(c) of the Act, as 

set forth below, because the affected 

Contract Owners will have: 

(1) Account values allocated to a SubAccount invested in a Replacement 

Fund with an investment objective and 

policies substantially similar to the 

investment objective and policies of the 

Replaced Fund; and 

(2) Replacement Funds whose current 

total annual expenses will be no higher 

than those of the Replaced Funds for 

their 2006 fiscal year, because as 

described below, JNL has agreed to, for 

a period of 24 months following the 

Substitutions, limit the total net 

expenses of a Replacement Fund to 

those of the Replaced Fund for the 2006 

fiscal year. At the end of the 24-month 

period it is possible that the expenses of 

the Replacement Funds may be higher. 

Applicants’ and Section 17 Applicants’

Legal Analysis 

1. Section 26(c) of the Act makes it 

unlawful for any depositor or trustee of 

a registered unit investment trust 

holding the security of a single issuer to 

substitute another security for such 

security unless the Commission 

approves the substitution. The 

Commission will approve such a 

substitution if the evidence establishes 

that it is consistent with the protection 

of investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

2. The purpose of Section 26(c) is to 

protect the expectation of investors in a 

unit investment trust that the unit 

investment trust will accumulate shares 

of a particular issuer by preventing 

unscrutinized substitutions that might, 

in effect, force shareholders dissatisfied 

with the substituted security to redeem 

their shares, thereby possibly incurring 

either a loss of the sales load deducted 

from initial premium payments, an 

additional sales load upon reinvestment 

of the redemption proceeds, or both. 

Moreover, in the insurance product 

context, a Contract Owner forced to 

redeem may suffer adverse tax 

consequences. Section 26(c) affords this 

protection to investors by preventing a 

depositor or trustee of a unit investment 

trust that holds shares of one issuer 

from substituting for those shares the 

shares of another issuer, unless the 

Commission approves that substitution. 

3. Applicants assert that the purposes, 

terms and conditions of the 

Substitutions are consistent with the 

principles and purposes of Section 26(c) 

and do not entail any of the abuses that 

Section 26(c) is designed to prevent. 

Applicants have reserved the right to 

make such a substitution under the 

Contracts and this reserved right is 

disclosed in the prospectus for the 

Contracts. 


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4. In both Substitutions, Applicants 

maintain, the investment objectives and 

policies of the Replacement Funds are 

sufficiently similar to those of the 

corresponding Replaced Funds that 

Contract Owners will have reasonable 

continuity in investment expectations. 

Accordingly, the Replacement Funds 

are appropriate investment vehicles for 

those Contract Owners who have 

account values allocated to the Replaced 

Funds. 

5. Applicants state that, for the 24- 

month period following the date of the 

Substitutions, JNL agrees to limit the 

total operating expenses of a 

Replacement Fund (taking into account 

any expense waiver or reimbursement) 

on an annualized basis to the net 

expense level of the corresponding 

Replaced Fund for the 2006 fiscal year. 

In addition, for 24 months following the 

Substitutions, JNL will not increase 

asset-based fees or charges for Contracts 

outstanding on the day of the 

Substitutions. JNL represents that the 

Substitutions and the selection of the 

Replacement Funds were not motivated 

by any financial consideration paid or to 

be paid by the Replacement Funds, their 

advisers or underwriters, or their 

respective affiliates. 

6. Applicants submit that, the 

Substitutions will not result in the type 

of costly forced redemption that Section 

26(c) was intended to guard against and, 

for the following reasons, is consistent 

with the protection of investors and the 

purposes fairly intended by the Act: 

(1) Each of the Replacement Funds is 

an appropriate fund to which to move 

Contract Owners with account values 

allocated to the Replaced Funds because 

the new funds have substantially similar 

investment objectives and policies. 

(2) The costs of the Substitutions, 

including any brokerage costs, will be 

borne by JNL and will not be borne by 

Contract Owners. No charges will be 

assessed to effect the Substitutions. 

(3) The Substitutions will be at the net 

asset values of the respective shares 

without the imposition of any transfer 

or similar charge and with no change in 

the amount of any Contract Owner’s 

account value. 

(4) The Substitutions will not cause 

the fees and charges under the Contracts 

currently being paid by Contract 

Owners to be greater after the 

Substitutions than before the 

Substitutions and will result in Contract 

Owners’ account values being moved to 

a Fund with the same or lower current 

total annual expenses. 

(5) All Contract Owners will be given 

notice of the Substitutions prior to the 

Substitutions and will have an 

opportunity before, and for 30 days 

after, the Substitutions to reallocate 

account value among other available 

Sub-Accounts without diminishing the 

number of free transfers that may be 

made in a given contract year and 

without the imposition of any transfer 

charge or limitation, other than any 

applicable limitations in place to deter 

potentially harmful excessive trading or 

disintermediation involving the fixed 

accounts available with the variable 

annuity contracts. 

(6) Within five days after a 

Substitution, JNL will send to its 

affected Contract Owners written 

confirmation that a Substitution has 

occurred. 

(7) The Substitutions will in no way 

alter the insurance benefits to Contract 

Owners or the contractual obligations of 

JNL. 

(8) The Substitutions will have no 

adverse tax consequences to Contract 

Owners and will in no way alter the tax 

benefits to Contract Owners. 

(9) Before a Replacement Fund relies 

on any Commission order or rule that 

would permit the Replacement Fund to 

enter into contracts with sub-advisers 

without obtaining shareholder approval, 

the Replacement Fund’s reliance on the 

order or rule will be approved, 

following the Substitutions, by a 

majority of the Replacement Fund’s 

outstanding voting securities. 

7. The Section 17 Applicants request 

an order under Section 17(b) exempting 

them from the provisions of Section 

17(a) to the extent necessary to permit 

JNL to carry out each of the proposed 

Substitutions. Section 17(a)(1) of the 

Act, in relevant part, prohibits any 

affiliated person of a registered 

investment company, or any affiliated 

person of such person, acting as 

principal, from knowingly selling any 

security or other property to that 

company. Section 17(a)(2) of the Act 

generally prohibits the persons 

described above, acting as principal, 

from knowingly purchasing any security 

or other property from the registered 

company. 

8. Applicants state that, JNL, as 

depositor of the Separate Accounts, is 

an affiliate of the Separate Accounts and 

also JNF Advisor, which serves as 

investment adviser for the affected 

NLVT series. As such, JNF Advisor 

could be deemed to control the affected 

NLVT series and be an affiliate of the 

affected NLVT series. Assuming, for this 

or other reasons, that an affected NLVT 

series is an affiliate of an affiliate of JNL, 

to the extent the Separate Accounts each 

use assets received in-kind to purchase 

Replacement Fund Shares, the 

Substitutions would involve one or 

more purchases or sales of securities or 

property between persons who are 

affiliates of affiliates. Accordingly, the 

Section 17 Applicants are seeking relief, 

to the extent necessary, from Section 

17(a) for the in-kind purchases and sales 

of Replacement Fund Shares. 

9. Section 17(b) of the Act provides 

that the Commission may, upon 

application, grant an order exempting 

any transaction from the prohibitions of 

Section 17(a) if the evidence establishes 

that: 

(1) The terms of the proposed 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned; 

(2) the proposed transaction is 

consistent with the policy of each 

registered investment company 

concerned, as recited in its registration 

statement and records filed under the 

Act; and 

(3) the proposed transaction is 

consistent with the general purposes of 

the Act. 

10. The Section 17 Applicants submit 

that, for all the reasons set forth in 

paragraphs 3–9 above, the terms of the 

proposed in-kind purchases of shares of 

the Replacement Funds by the Separate 

Accounts, including the consideration 

to be paid and received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned. The Section 17 Applicants 

also submit that the proposed in-kind 

purchases by the Separate Accounts are 

consistent with the policies of JNL and 

the affected NLVT series. Finally, the 

Section 17 Applicants submit that the 

proposed substitutions are consistent 

with the general purposes of the Act. 

11. To the extent the Separate 

Account’s in-kind purchases of 

Replacement Fund shares are deemed to 

involve principal transactions between 

entities which are affiliates of affiliates, 

the procedures described below, 

Applicants and Section 17 Applicants 

contend, should be sufficient to assure 

that the terms of the proposed 

transactions are reasonable and fair to 

all participants. The Section 17 

Applicants maintain that the terms of 

the proposed in-kind purchase 

transactions, including the 

consideration to be paid and received by 

each Fund involved, are reasonable, fair 

and do not involve overreaching. In 

addition, although not applicable, the 

in-kind transactions will conform with 

all except one of the conditions 

enumerated in Rule 17a–7. The 

proposed transactions will take place at 

relative net asset value in conformity 

with the requirements of Section 22(c) 

of the Act and Rule 22c–1 thereunder 


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18290 Federal Register / Vol. 72, No. 69 / Wednesday, April 11, 2007 / Notices 

with no change in the amount of any 

Contract Owner’s account value or 

death benefit or in the dollar value of 

his or her investment in any SubAccount. Contract Owners will not 

suffer any adverse tax consequences as 

a result of the substitutions. The fees 

and charges under the Contracts will not 

increase because of the substitutions. 

Even though they may not rely on Rule 

17a–7, the Section 17 Applicants 

believe that the Rule’s conditions 

outline the type of safeguards that result 

in transactions that are fair and 

reasonable to registered investment 

company participants and preclude 

overreaching. 

12. The Section 17 Applicants state 

that they will carry out the proposed inkind purchases in conformity with all of 

the conditions of Rule 17a–7 and each 

Fund’s procedures thereunder, except 

that the consideration paid for the 

securities being purchased or sold may 

not be entirely cash. Nevertheless, they 

contend, the circumstances surrounding 

the proposed Substitutions will be such 

as to offer the same degree of protection 

to each Replacement Fund from 

overreaching that Rule 17a–7 provides 

to them generally in connection with 

their purchase and sale of securities 

under that Rule in the ordinary course 

of their business. In particular, JNL (or 

any of its affiliates) cannot effect the 

proposed transactions at a price that is 

disadvantageous to any of the 

Replacement Funds. Although the 

transactions may not be entirely for 

cash, each will be effected based upon 

(1) the independent market price of the 

portfolio securities valued as specified 

in paragraph (b) of Rule 17a–7, and (2) 

the net asset value per share of each 

Fund involved valued in accordance 

with the procedures disclosed in its 

registration statement and as required 

by Rule 22c–1 under the Act. No 

brokerage commission, fee (except for 

customary transfer fees), or other 

remuneration will be paid to any party 

in connection with the proposed in-kind 

transactions. 

13. Applicants state that the sale of 

shares of Replacement Funds for 

investment securities, as contemplated 

by the proposed in-kind transactions, is 

consistent with the investment policy 

and restrictions of the Replacement 

Funds because (1) the shares are sold at 

their net asset value, and (2) the 

portfolio securities are of the type and 

quality that the Replacement Funds 

would each have acquired with the 

proceeds from share sales had the shares 

been sold for cash. To assure that the 

second of these conditions is met, each 

Replacement Funds’ sub-adviser will 

examine the portfolio securities being 

offered to each Replacement Fund and 

accept only those securities as 

consideration for shares that it would 

have acquired for each such fund in a 

cash transaction. 

14. The proposed in-kind 

transactions, Applicants state, are 

consistent with the general purposes of 

the Act as stated in the Findings and 

Declaration of Policy in Section 1 of the 

Act. The proposed transactions do not 

present any of the conditions or abuses 

that the Act was designed to prevent. In 

particular, Sections 1(b)(2) and (3) of the 

Act state, among other things, that the 

national public interest and the interest 

of investors are adversely affected 

‘‘when investment companies are 

organized, operated, managed, or their 

portfolio securities are selected in the 

interest of directors, officers, investment 

advisers, depositors, or other affiliated 

persons thereof, or in the interests of 

other investment companies or persons 

engaged in other lines of business, 

rather than in the interest of all classes 

of such companies’ security holders; 

* * * when investment companies 

issue securities containing inequitable 

or discriminatory provisions, or fail to 

protect the preferences and privileges of 

the holders of their outstanding 

securities * * *’’. For all the reasons 

stated in the Application, the Section 17 

Applicants state that, the abuses 

described in Sections l(b)(2) and (3) of 

the Act will not occur in connection 

with the proposed in-kind purchases. 

15. The Commission has previously 

granted exemptions from Section 17(a) 

in circumstances substantially similar in 

all material respects to those presented 

in this Application to applicants 

affiliated with an open-end management 

investment company that proposed to 

purchase shares issued by the company 

with investment securities of the type 

that the company might otherwise have 

purchased for its portfolio. In these 

cases, the Commission issued an order 

pursuant to Section 17(b) of the Act 

where the expense of liquidating such 

investment securities and using the 

cash-proceeds to purchase shares of the 

investment company would have 

reduced the value of investors’ ultimate 

investment in such shares. 

Conclusions 

1. Applicants request an order of the 

Commission pursuant to Section 26(c) 

of the 1940 Act approving the 

Substitutions. Section 26(c), in pertinent 

part, provides that the Commission shall 

issue an order approving a substitution 

of securities if the evidence establishes 

that it is consistent with the protection 

of investors and the purposes fairly 

intended by the policy and provisions of 

the 1940 Act. For the reasons and upon 

the facts set forth in the Application, the 

Applicants state that the requested order 

meets the standards set forth in Section 

26(c) and should, therefore, be granted. 

2. Section 17 Applicants request that 

the Commission issue an order pursuant 

to Section 17(b) of the Act exempting 

the Separate Accounts, JNL and the 

affected NLVT series from the 

provisions of Section 17(a) of the Act to 

the extent necessary to permit, as part 

of the Substitutions, the in-kind 

purchase of shares of the Replacement 

Funds which may be deemed to be 

prohibited by Section 17(a) of the Act. 

The Section 17 Applicants represent 

that the proposed in-kind transactions 

meet all of the requirements of Section 

17(b) of the Act and that an exemption 

should be granted, to the extent 

necessary, from the provisions of 

Section 17(a). 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6867 Filed 4–10–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–27778; File No. 812–13347] 

MetLife Insurance Company of 

Connecticut, et al. 

April 6, 2007. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order of approval pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘Act’’), and an 

order of exemption pursuant to Section 

17(b) of the Act from Section 17(a) of 

the Act. 

APPLICANTS: MetLife Insurance 

Company of Connecticut (‘‘MetLife of 

CT’’), MetLife of CT Separate Account 

Five for Variable Annuities (‘‘Separate 

Account Five’’), MetLife of CT Separate 

Account Seven for Variable Annuities 

(‘‘Separate Account Seven’’), MetLife of 

CT Separate Account Nine for Variable 

Annuities (‘‘Separate Account Nine’’), 

MetLife of CT Separate Account Eleven 

for Variable Annuities (‘‘Separate 

Account Eleven’’), MetLife of CT 

Separate Account Thirteen for Variable 

Annuities (‘‘Separate Account 

Thirteen’’), MetLife of CT Fund U for 

Variable Annuities (‘‘Fund U’’), MetLife 

of CT Separate Account PF for Variable 

Annuities (‘‘Separate Account PF’’), 


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